The main trick is in getting others to let you get away with it.
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Our neighboring countries have a higher tax rate, while offering worse public services… I think a lot of it is cultural as well, but in the end, I see no real example of higher tax rates to leading to a higher QOL - I prefer Switzerland’s approach very much.
My example for 2nd and 3rd pillar withdrawals just shows that you need to be careful with the tax rates when paying in and taking out the money, but overall those tax rates are rather humane and I’m okay paying them - even though 0 taxes on retirement funds would be even better.
The relevant metric is tax revenue per capita. That’s the whole point, tax rate by itself doesn’t mean much. (Also should compare comparable things, retirement/healthcare are sometimes counted as tax informally, and while in Switzerland it’s paid separately).
It’s actually easier to compare within Switzerland because it’s still kinda the same model so comparable. Some french speaking cantons are facing the same issue, they have large population (much larger than Zug/Schwyz/etc.), often lower tax revenue per capita (so need high tax to be able to spend as much as those low tax cantons). They can’t really play the tax game because they have too much to lose vs. how much they can attract (plus it’s a zero sum game, with the floor being 0, if they’re more attractive than Zug, that’s less revenue for Zug).
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Indeed, my marginal tax rate is over 40% in Vaud . Ok the income is high, andf I do strongly support progressive taxes, but these cantonal differences infuriate me.
I think they are one of the biggest strengths of the Swiss federal system and one of the main reasons of the wealth of Switzerland.
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But most people have zero choice in where they can live. I cannot move out of Vaud due to employment and family, so I am stuck with a much larger tax bill, of which I basically get zero benefit and instead also get get higher health insurance etc. Cantons like Zug just attract those that are lucky to be able to avoid taxes, not through meritocracy, but by not having children etc.
IMO, 30% federal tax and a 3-10% cantonal tax (at my income level) would be much fairer, and avoids the race to the bottom which is definitely an issue. I don’t have an issue with a > 40% marginal tax rate, i have an issue when people are not paying taxes equally based on factors completely out of my control.
You can also flip this argument to the lowest earners. I believe canton Bern has some of the most regressive taxes for low earners, so some people struggling to make ends meet get a painful tax bill on their meagre earnings, while other progressive tax cantons might not even tax them at all. I am very much in favor of those on the lowest income not paying any taxes. This is much more achievable with a more uniform taxation based primarily on federal taxation
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From here https://www.swisstaxmap.ch/, if I could magically move to Zug I could 55K a year in taxes. How does that make any sense?
Wait, what?
Family, I can understand provided health or assistance issues make it imperative to live close to relatives (the social issue is discretionary, though I understand it can weigh heavily in the balance. Our family on my father’s side mostly live in a very narrow perimeter while on my mother’s side, they are sprinkled all over Switzerland).
For employment, there are very few jobs where similar employment wouldn’t be available in another canton (though there are indeed a few that would limit availability). There again, our job is a choice we’ve made in our life and career changes can be done successfully so, also discretionary.
I also challenge the no benefit of Vaud taxes. For one and as you have mentioned, the salaries might be better than elsewhere (Valais/Wallis is generally lower for a similar position, experience level and responsibilites). There probably are other advantages and if the tax system, especially the progressivity of it, is a problem, voting and convincing others to vote are a way to alter it.
There are some special situations that would make moving a disproportionate hurdle (the one I can think of is family health issues). That may be you. For the vast majority of people, it is a discretionary choice revolving around interests and, if there are regrets or jealousy involved, comfort.
Edit: @clueless :
It makes sense because it isn’t magic. It involves facing discomfort. Some people are born in those cantons, some move into them, some enjoy the other advantages other cantons have to offer and live happily elsewhere. Life isn’t fair but when we want our situation to change, the only efficient way to make it happen is to actively make it.
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You could also have increased fiscal equalisation. I don’t know how it is in other cantons, but for instance in VD the richest municipalities pay 90+% of their tax revenues to the communal fiscal equalisation scheme.
By comparison, ZG pays around 30% if I’m not mistaken.
I believe letting cantons compete on tax rate is important, and increasing the federal rate while decreasing the cantonal rates would go against that. But when ZG is the only canton that has so much money they can afford to decrease the health participation, at this point it’s no longer a matter of how well the canton is run. The tax basis differences aren’t properly equalised.
Look at how much housing costs in Zug and you might decide against the move.
Tax is just one aspect, things usually balance out. Otherwise, you might as well move to Dubai if tax is your sole concern.
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It also works both ways. Without low taxes, fewer people and companies wanted to settle in those places and they’d be the poorhouse of the country again. In larger countries, those poor masses (ok, not that big masses) would then just migrate to the richer cities, which creates its own problems.
Eventually, you can mandate a balance by centralized rules, let people vote on the local ballot, or let the market do its magic by letting them vote with their purse and feet. CH is doing a mix of all those, as do many other countries in some form.
Nabalzhbf mentioned it, the effect is helped by size and location. I bet thsese Canton’s narrative is different, and ZG beame an attractive place by itself, but it wouldn’t be nearly as successful if it weren’t for the proximity to ZH.
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This is not what “having no choice” means… You don’t want to move due to family and current employment. Nothing is physically stopping you from learning German and working in ZH. Canton VD has a ton of social programms and is very lax with granting welfare benefits - I have relatives abusing the system there, so I know what I’m talking about… this wouldn’t fly in AG or ZH/ZG lol.
It’s an issue in your oppinion - i think ever lowering tax rates are the natural consequence of a lean government and technological advancment. We have way too much federal and cantonal employees already, I definetly don’t want to pay more taxes without receiving a benefit.
VD is self responsible canton and so are it’s inhabitants. It’s up to you guys and girls to trim the fat and lower your tax rates (like other cantons do) - and as for the insurance premiums… well there’s just a cultural difference in this regard - it’s not random that SZ has a lower healthcare premium than VD or GE or wahtever, it’s quite logical if you look at the “work ethic” of the avg. Romand, vs Allmand.
Sounds good in theory, now look on a global scale - no matter how much people and economists are debating about it: Low taxation is the primary state driven determinator for the middle class dude to accumulate wealth (ofc given a good education, career and savings rate) go try becoming a millionaire in France or Germany… yeah no thanks - I don’t want to touch these culture influences on how a government needs to be “fair” rather than pragmatic, with a 10 ft pole.
Absolutely not - and this is fundamentally against the founding history of our countey. We are a conglomerate of municipalities that then fused to cantons that then joined the federation. The federatiion has absolutely no business in telling the municipalities and cantons how to run their daily business besides very select and agreed uppon areas.
I don’t want to found your socialist-adjacent tax dream and you probably don’t want to fund my tax cuts either, which is why we have different cantons - may the better competitor win, although imho it’s objectively clear whose approach is the favorable outcome for most of it’s citizens.
You also talk about fairness, but this is almost irrelevant. Tax revenue is there to fund the government, not to redestribute wealth, we aren’t a socialist state and yeah - people earning more can and do contribute more in taxes, that however doesn’t entitle you or the state to their wealth - you have nothing to do with the value produced in ZG and thus don’t get a say how they choose to tax their own citizens and companies.
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This discussion has strayed too much into offtopic (“politics”), please stop.
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I live in a low tax canton and quality of life is superb here.
moreover, one of the things i love about switzerland is that i genuinely believe tax revenues are spent efficiently here
no complaints from me
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